European Union countries agreed on Monday (12 September) to slash funds from next year’s EU budget to poor regions of the bloc, mostly in the east, while increasing spending to manage migration flows and spur growth.

In an unprecedented wave of migration last year, 1.3 million people reached the southern shores of the EU, heading mainly to Germany from Greece and Italy.

A European Commission proposal to increase funds to address the migrant crisis in the EU budget for 2017 was fully backed by EU governments.

That will result in a nearly 25% spike in migration and security payments compared with this year’s budget, the Council of EU governments said in a statement published on Monday (12 September).

Payments for cohesion are down by 23.94% in the 2017 draft budget compared to 2016, but payments for the heading “Security and citizenship” are up by 24.42%. The Parliament is yet to give its opinion on what looks like an unusual budget.

The migration budget for next year would total €5.2 billion, with funds to be spent on reinforcing external borders, resettling asylum seekers and integrating migrants, while another €2.2 billion would be for action outside the EU to address the causes of refugee flows.

EU governments also supported a 9% increase next year to €19 billion in payments for EU projects aimed at promoting growth and creating jobs, as the bloc is still struggling to bring down high levels of unemployment after the 2007-08 financial crisis.

To compensate for the higher expenses on migration and jobs, the EU agreed to cut other spending and slash funds destined for the least developed regions of the bloc, which will see in 2017 a fall in payments by nearly 24% year-on-year.

Eastern European countries are the main beneficiaries of development funds and fear that this decision could pave the way for bigger cuts in coming years, diplomats told Reuters.

On Tuesday, the European Commission plans a regular review of the EU financial framework for the period 2014-20, and may propose a more flexible budget giving priorities to emergencies and cutting fixed expenses, a diplomat said.

Some see the budget decision as possible retribution for the opposition of Eastern European countries to EU plans to share out the hosting of asylum seekers across the 28 member states, which have largely missed targets.

But Eastern European countries accepted the proposed budget as it also includes spending reductions in several sectors, including agriculture and research.

The cuts for poor regions, the largest of all expenditure headings, are partly due to the longer periods needed by regional administrations to launch development projects, which usually surge towards the final phase of EU long-term budgets, the current running between 2014 and 2020, an EU official told Reuters.

Overall, the Council agreed to reduce the EU budget in 2017 by 7% compared with this year to €133.8 billion in payments.

It slashed more than €820 million from the Commission proposal, increasing cuts to poor regions already proposed by the EU executive. It also cut funds for EU space projects, such as the satellite navigation programme Galileo, for farmers and for nuclear energy programmes, such as the fusion reactor ITER.

The Council’s agreement must be endorsed by the European Parliament by mid-November.

Background

The EU's annual budget reached €145 billion in 2015 - a large sum in absolute terms, but which represents only about 1% of the wealth generated by EU economies every year.

Is €1 trillion too much or not enough to fund the many activities of the European Union for the next seven years? This is the main question that European institutions and the 27 member countries’ leaders will have to answer early next year.